ESAGA, SHIRLEY L.
BSA 3
VERTICAL ORGANIZATION ELEMENTS
In a vertical organization, your business has a pyramidal top-down structure, with a CEO, president or
owner at the top, a middle section of managers and supervisors, and a bottom section of regular
employees. As a business owner, you would make all the major decisions about marketing, sales, and
customer service standards, then communicate those decisions to your middle management. These
managers would then be responsible for telling your employees the work processes that will achieve
desired goals. The word “vertical” refers to the fact that the organization works from the top to the
bottom, and that employees are not required or expected to contribute to the choices that you make
regarding how the company operates.
HORIZONTAL ORGANIZATION ELEMENTS
In a horizontal organization, your business has a flat structure, which means there are very few
managers and more authority is granted to rank-and-file employees. This system allows employees to
feel empowered, because they can make important decisions without needing approval from a
manager. Rather than having to satisfy a manager, employees in a horizontal organization are motivated
and driven by company goals, which can improve efficiency and morale.
DIFFERENCE BETWEEN VERTICAL AND HORIZONTAL BUSINESS ORGANIZATIONS
One of the main differences between vertical and horizontal business organizations is that in a vertical
system, upper-level management issues orders and employees follow those orders without input or
objection. In contrast, employees in a horizontal organization are encouraged to make suggestions and
offer ideas that can improve workplace processes, and are given the authority to implement changes
without having to obtain authorization.
PUSH AND PULL PLANNING STRATEGIES
The business terms push and pull originated in logistics and supply chain management but are
also widely used in marketing, and is also a term widely used in the hotel distribution business.
Wal-Mart is an example of a company that uses the push vs. pull strategy.
"Push type" means make to Stock in which the production is not based on actual demand. "Pull
type" means make to Order in which the production is based on actual demand. In supply chain
management, it is important to carry out processes halfway between push type and pull type or
by a combination of push type and pull type.
One of the major reasons why supply chain management currently receives so much attention is
that information technology enables the shifting of a production and sales business model from
"Push type" to "Pull type". Pull-type supply chain management is based on the demand side
such as Just-in-Time (JIT) and CRP (Continuous Replenishment Program) or actual demand
assigned to later processes. Therefore, unlike the Push-type method it is not Make to Stock,
which is based on demand forecast. While inventory is kept to a minimum, products can be
supplied with short lead times and at high speed. At the point where "Pull type" starts to supply
operations triggered by actual demand, it is like an elevator. An elevator starts when a button is
pressed even if there is only one passenger. On the other hand, the "Push type" can be
considered as an escalator. An escalator continues to supply (push) regardless of whether there
is actual demand (passenger). In addition, "Push type" corresponds to a model for trains, buses,
and airplanes for which supply (push) is based on demand forecast by time period and route.
There may be various forms between "Push type" and "Pull type" depending on inventory forms
of materials, work in progress (WIP), and finished items and how to deal with the actual demand
in supply chain management.
KANBAN
Initially, it arise a scheduling system for lean manufacturing, originating from the Toyota Production
System (TPS). In the late 1940s, Toyota introduced “just in time” manufacturing to their production. The
approach represents a pull system. This means that production is based on customer demand, rather
than the standard push practice to produce amounts of goods and pushing them to the market.
Their unique production system laid the foundation of Lean manufacturing or simply Lean. Its core
purpose is minimizing waste activities without sacrificing productivity. The main goal is to create more
value for the customer without generating more costs.
Source: TOYOTA Global Website
The Kanban Method
At the beginning of the 21st Century, key players within the software industry quickly realized how
Kanban could be used to positively change the ways in which products and services were delivered.
With an increased focus on efficiency, and by harnessing advances in computing technology, Kanban left
the realm of the automotive industry and was successfully applied to other complex commercial sectors
such as IT, software development, marketing and so on.
Indeed, what we now recognize as the Kanban Method with all core elements emerged at the beginning
of 2007.
The simplest Kanban board may start with three columns – “Requested”, “In Progress” and “Done”.
When constructed, managed and functioning properly, it serves as a real-time information repository,
highlighting bottlenecks within the system and anything else which might get in the way of smooth
working practices.
